Which of the following is an advantage of using the scattergraph method over the high-low method to estimate costs?
A)It utilizes statistics to determine the "best fit."
B)A cost analyst can review the data visually and eliminate outliers.
C)It provides a superior quality cost formulae because it relies on the objective judgement of the analysts.
D)The cost formula can be determined simply by looking at two points of data.

Question

Quizplus · Accepted Answer

The scattergraph method allows a cost analyst to visually review the data and eliminate any outliers that may skew the calculation of the cost formula. This is not possible with the high-low method, which relies solely on two points of data to estimate costs. The scattergraph method also allows for a more accurate determination of the cost formula by utilizing a regression analysis to determine the "best fit" line. Therefore, option A is incorrect. Option C is also incorrect as the scattergraph method does not rely on the subjective judgement of the analyst.

Which of the Following Is an Advantage of Using the Scattergraph